Political sovereignty came in a day, economic sovereignty took thirty-one years

One treaty, two clocks

The Treaty of Lausanne was signed on 24 July 1923, and its Article 28 abolished the Capitulations in every respect and without exception. The judicial and fiscal privileges held by foreigners ended in law at that moment. This part of the text closes in a single sentence on a single date, and it is the part the founding narrative carries.

The commercial regime of the same treaty set a second clock running. The right to set customs tariffs freely was frozen for five years, and those five years ran not from the day of signature but from entry into force on 6 August 1924. A US State Department exchange dated 25 July 1928 records that the regime would expire at the end of August 1929. Tariff sovereignty therefore began five years after 1923, not with it.

Debt was the third item. The obligations of the Ottoman state were not cancelled but apportioned. The agreement reached in Paris on 13 June 1928 assigned 107.5 million of a 161.3 million gold Ottoman lira total to Türkiye. A newly founded state thus inherited a debt it had not contracted.

What the intervening six years bought

The gap between 1923 and 1929 was not idle. With the tariff instrument out of reach, Ankara worked with the tools it did hold. The İzmir Economic Congress convened on 17 February 1923, five months before Lausanne was signed, and drew 1,135 delegates. Debating an economic programme while political sovereignty was still unsettled shows the sequencing was deliberate.

The measures that followed produced protection without touching duties. The Cabotage Law, no. 815, was adopted on 19 April 1926 and took effect on 1 July 1926, reserving carriage in Turkish waters for the Turkish flag. The Law for the Encouragement of Industry, no. 1055, was enacted on 28 May 1927 with a fifteen-year term. İş Bankası was founded on 26 August 1924 with 1 million lira of capital and two branches. The Industry and Mining Bank followed on 19 April 1925 under law no. 633.

These measures share one feature. None of them touches taxes on foreign trade. With the binding constraint sitting on tariffs, the state advanced where no constraint applied. By the time tariff freedom finally arrived on 1 October 1929, the institutional ground for using it was already laid. The central bank comes at the end of that sequence. Law no. 1715 passed on 11 June 1930 and the bank opened for business on 3 October 1931.

Why the debt took thirty-one years

Closing the tariff leg in 1929 did not complete economic sovereignty, because the second leg ran on a payment schedule. The restructuring agreed in Paris on 22 April 1933 wrote off roughly 28.2 million lira of principal. The remaining 78.3 million lira was spread over fifty years at an interest rate of 7.5%.

The final instalment was paid on 25 May 1954, thirty-one years after the Republic was proclaimed. Throughout that span one budget line served an obligation the state had not created, and every year that line displaced other spending.

New borrowing had begun well before the old debt closed. The Republic's first foreign loan was 10 million dollars raised from the United States in 1930. So 1954 marks the closing of an accounting item rather than the end of an era, and the relationship with external finance never broke.

What it says today

The lesson of the founding period is sequencing rather than thrift. A state advances with the instrument it holds; where it holds none, it moves where no constraint binds. The distance between the declared part of sovereignty and the paid part is measured in years.

The scale is beyond comparison today. The share assumed in 1928 was 107.5 million gold Ottoman lira; World Bank data put Türkiye's gross external debt stock at 514.99 billion dollars in 2024. The institutional relationship has been formalised as well. Türkiye joined the IMF on 11 March 1947, has concluded nineteen arrangements since, and holds a quota of 4,658.6 million SDR, with no programme currently active.

Only the mechanism is unchanged. What matters is not the size of the external obligation but the capacity to roll it over. That capacity is measured in reserves, in the credit premium and in the cost of borrowing. In 1923 the answer was to advance with other tools while waiting for the tariff; the same question is now put with different tools in the same form.

In remembrance

We remember Gazi Mustafa Kemal Atatürk, founder of the Republic, and his comrades-in-arms with respect, gratitude and longing.